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Refinance Calculator

Find out if refinancing your mortgage makes sense. Compare monthly savings, break-even point, and lifetime interest savings against closing costs.

Current & New Loan Details

— Current Loan —

= 26.0 years left

— New Loan —

Typically 2–5% of loan amount. Includes origination, appraisal, title.

Results computed instantly — your data never leaves your device.

Live Results

Real-Time

New Monthly Payment

$1,970.3

Monthly Change

−$212.7

savings per month

Break-Even Point

29 months

≈ 2.4 years

Lifetime Interest Savings

$28,210.21

more in interest (longer term)

Current Remaining Interest

$361,096

New Total Interest

$389,306.21

100% Client-SidePrivate & Secure
ℹ You're extending your term beyond the current payoff date (26.0 yrs remaining → 30 yrs new). Monthly savings may be offset by additional interest over the longer timeline.

Current Loan

$2,183/mo

Total interest: $361,096

Term: 26.0 yrs

Refinanced Loan

$1,970.3/mo

Total interest: $389,306.21

Term: 30.0 yrs

How to Use the Refinance Calculator

  1. 1

    Enter your current loan balance, interest rate, monthly P&I payment, and months remaining.

  2. 2

    Input the new loan's interest rate and term you're considering.

  3. 3

    Add estimated closing costs (2–5% of loan amount is typical).

  4. 4

    Choose whether to pay closing costs upfront or roll them into the new loan.

  5. 5

    Review the break-even point, monthly savings, and lifetime interest comparison.

Formula & Mathematical Basis

Break-Even (months) = Closing Costs ÷ Monthly Savings | Net Savings = (Current PMT − New PMT) × Projection Months − Closing Costs

Variable Key

New PMT

New monthly P&I = P × [r(1+r)^n] / [(1+r)^n − 1], where P = new balance, r = new monthly rate, n = new term months

Monthly Savings

Current Monthly Payment − New Monthly Payment (positive = savings)

Break-Even

Months until cumulative savings equals out-of-pocket closing costs

Lifetime Interest Savings

Remaining interest on current loan − Total interest on new loan (can be negative if term is extended)

📝 If closing costs are rolled into the new loan, the break-even point is zero months (no upfront cost) but total interest paid is higher. The lifetime interest comparison accounts for the remaining current term vs. the full new term.

Step-by-Step Examples

1

Rate drop refinance — clear winner

Scenario: $320,000 balance, 7.25% → 6.25%, 30-year refi, $6,400 closing costs, 312 months remaining.

  1. 1.Current payment at 7.25%: ≈ $2,183/month.
  2. 2.New payment at 6.25% / 30 years: ≈ $1,971/month.
  3. 3.Monthly savings: $212.
  4. 4.Break-even: $6,400 ÷ $212 ≈ 30 months.
  5. 5.If staying 10+ years: total savings far exceed closing costs.
✅ Break-even in 2.5 years. Saves $212/month and ~$29,000 in interest over 10 years.
2

Term extension risk

Scenario: $200,000 balance with 10 years left at 6%. Refinancing to 30 years at 5.5%.

  1. 1.Current remaining interest: ≈ $65,000.
  2. 2.New 30-year interest: ≈ $208,000.
  3. 3.Monthly payment drops $600 but costs $143,000 more in total interest.
✅ Lower monthly payment but $143,000 more in interest — not recommended unless cash flow is critical.

Practical Use Cases

  • Lowering monthly payment when interest rates drop significantly below your current rate
  • Switching from a 30-year to a 15-year mortgage to build equity faster
  • Eliminating PMI by refinancing once you reach 20% equity
  • Converting an adjustable-rate mortgage (ARM) to a fixed-rate loan for payment stability
  • Evaluating whether a lender's promotional rate offer genuinely saves money

Common Mistakes to Avoid

  • Refinancing when you plan to sell soon — if you move before the break-even point, you lose money on closing costs.
  • Resetting the clock on a nearly-paid-off mortgage — refinancing a 5-year-old 30-year loan to another 30 years dramatically increases lifetime interest.
  • Ignoring closing costs in "no-closing-cost" offers — the cost is embedded in a higher rate and paid over time.
  • Refinancing repeatedly without strategic purpose — each refi resets amortization, and early payments are mostly interest.

Glossary of Terms

Rate-and-Term Refinance
Replacing your existing mortgage with a new one at a different rate and/or term, without changing the loan balance significantly.
Break-Even Point
The month at which cumulative monthly savings from the lower payment exceed the upfront closing costs paid.
APR (Annual Percentage Rate)
The true annual cost of the loan including interest and fees, expressed as a percentage. Useful for comparing loan offers with different fee structures.
Amortization Reset
When you refinance, your new loan begins a fresh amortization schedule — early payments are again mostly interest rather than principal.

Frequently Asked Questions

When does refinancing make financial sense?

▾
The classic rule of thumb is to refinance when you can lower your rate by at least 1% and expect to stay in the home past the break-even point (when cumulative monthly savings exceed closing costs). However, smaller rate drops can still make sense on large balances or long remaining terms.

What are typical refinancing closing costs?

▾
Expect 2–5% of the loan amount, covering origination fees, appraisal ($300–$600), title search, title insurance, recording fees, and prepaid interest. On a $300,000 loan that's $6,000–$15,000. Some lenders offer "no-closing-cost" refis where costs are built into a slightly higher rate.

Should I choose a shorter or longer term when refinancing?

▾
A shorter term (e.g. 15-year) saves substantial interest but increases your monthly payment. A longer term (e.g. 30-year) lowers your payment but may cost more in total interest, especially if you reset a loan that was nearly paid off. The calculator shows both scenarios.

What is a cash-out refinance?

▾
A cash-out refi replaces your mortgage with a larger one, giving you the difference in cash. This calculator covers rate-and-term refinancing only. Cash-out refis have separate LTV and equity requirements and typically carry slightly higher rates.

How does rolling closing costs into the loan affect savings?

▾
Rolling in closing costs eliminates the upfront expense but increases your loan balance, raising your monthly payment slightly and costing more in interest over time. The break-even calculation changes because there's no upfront cost to recover — but you pay more overall.

Sources & References

  1. [1]
    When to Refinance Your Mortgage— Consumer Financial Protection Bureau, 2024
  2. [2]
    Mortgage Refinance Guide— Federal Reserve, 2023

CalculatorFree Mortgage TeamCertified Mortgage Planning Specialist (CMPS) Advisory Review

Refinance break-even methodology validated against CFPB and Federal Reserve published guidelines.

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